David Blitzer, managing director and chairman of the Index Committee and S&P Dow Jones Indices, speaks at the Bloomberg global markets summit in New York, U.S., on Thursday, Jan 17, 2013. Photographer: Jin Lee/Bloomberg
David Blitzer was first appointed chairman of the index committee in 1995 © Bloomberg

The most powerful man on Wall Street who you have never heard of is retiring.

David Blitzer, the chairman of S&P Dow Jones’s index committee and the ultimate arbiter of what makes it into its immensely influential benchmarks, will retire in August after almost four decades at the company.

Mr Blitzer, known for his bow ties and silvery chinstrap beard, was first appointed chairman of the company’s index committee in 1995, putting him in charge of overseeing the composition of the S&P 500 — the most widely followed index in the world. Since the 2012 purchase of Dow Jones Indices, he has also controlled the iconic Dow Jones Industrial Average.

“With David’s appointment to chairman of the US Equity Index Committee in 1995, a new era in index governance was ushered in,” Douglas Peterson, chief executive of S&P Global, said in a statement. “The level of transparency, integrity and independence that David brought to our global family of indices is the reason why S&P Dow Jones Indices is viewed as the gold standard in the indexing industry.”

Financial indices are arguably the most under-appreciated force shaping global markets. Fund managers have long used them to gauge their performance, but the importance of benchmarks has swelled in recent years thanks to the boom in passive investment — where indices form the industry’s bedrock.

For example, MSCI’s decision to increase China’s weighting in its flagship emerging markets index earlier this year has helped fuel a 32 per cent rally in the country’s stock market already in 2019. Twitter’s stock jumped 5 per cent on the 2017 announcement it would gain entry into the S&P 500.

The index fund industry’s breakneck pace of product development has spurred benchmark providers to create indices that measure everything from the performance of companies that adhere to Catholic values to volatility derivatives or junk bonds.

As a result, the number of indices globally climbed 12 per cent to 3.73m in the year to June 2018, according to the second annual survey of the landscape by the Index Industry Association, a trade body.

“Last year we were able to quantify the index landscape for the first time ever. Now that we have a baseline, it’s fascinating to see the amount of innovation coming out of fixed income where investors are looking for more fine-tuned benchmarks,” Rick Redding, the chief executive of the IIA, said in the report.

The index industry has consolidated, so a lot of power is now concentrated in the hands of three companies: MSCI, FTSE Russell and S&P Dow Jones Indices. It is a profitable niche, with shares in MSCI — the “purest” index provider of the big three — rising an average of 31 per cent a year since the financial crisis. The S&P 500 itself has only risen at half that pace.

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